How did oil price war impact global finance?

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Global Financial Markets Suffer Severe Blow from Oil Price War and Coronavirus Pandemic

The global financial markets have experienced a devastating sell-off, with an estimated US$15 trillion wiped out, largely driven by the coronavirus pandemic and an ensuing oil price war between Saudi Arabia and Russia. This dual shock has triggered significant declines across stock markets, emerging market currencies, and commodity prices, marking one of the most destructive periods since the Great Depression.
Stock Markets Face Unprecedented Losses

World stock markets have collectively lost approximately US$15 trillion in value. Wall Street's Dow Jones and S&P 500 indices saw declines of 22 per cent and 24 per cent respectively, while the MSCI 49-country world index dropped by nearly 25 per cent. London's FTSE index also experienced a 27 per cent slump. The rapid fall has been particularly stark given that major indices like the S&P and Dow were at record highs in mid-February, making the subsequent crash appear more brutal.
Emerging Market Currencies and Commodities Plummet

The impact has been severe on emerging markets, with currencies in countries such as Brazil, Mexico, and South Africa plummeting by over 20 per cent. This sharp depreciation is closely linked to the carnage in commodity markets. Brent crude oil, for instance, fell by 62 per cent in the first quarter to US$25 a barrel, a decline attributed to both the coronavirus crisis and the price war. Industrial metals like copper, aluminium, and steel have also seen significant drops of 15-22 per cent, while agricultural staples such as coffee and sugar have fallen by 17 per cent and 10 per cent, respectively.
Oil Price War Puts Public Finances at Risk

The price war initiated by Saudi Arabia and Russia has not only destabilised global commodity markets but also poses a significant risk to the public finances of these two nations. The substantial drop in oil prices directly impacts their revenue streams, highlighting the precarious economic situation caused by the conflict. The broader market volatility has also led to stress in corporate borrowing markets, with concerns arising about the potential collapse of entire sectors, such as airlines, which have seen half their value disappear.

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How did oil price war impact global finance?

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